China is quickly and quietly taking control of the hydrogen fuel cell market, with market activity over the past year dwarfing that across the rest of the world. While the country pushes to catch up with electrolyzer technologies, it could be set to dominate demand-side sectors in the hydrogen economies, if international competitors fail to step up their pace.
Throughout 2021, hydrogen fuel cell vehicle production in China increased by 48% to 1,777 units. Around 35% of this was achieved in December, according to the latest data released by the China Auto Association.
But the real headline figure is production capacity, which exploded five-fold through the year, even despite strict lockdown measures in many provinces across the country. From an 8,000 unit-per-year capacity at the start of 2021, the five major fuel cell manufacturers have all expanded production capacity, with their cumulative annual capacity now surpasses 45,000 units.
Sinohytec has expanded its initial 2,000 unit capacity in Beijing to 10,000 units. Shanghai REFIRE now has two 5,000 unit facilities in operation in the provinces of Guangdong and Tianjin, having previously had an overall production capacity of just 2,000 units. Sinosynergy expanded its 2,000 unit facility in Guangdong to 5,000 units.
Jiangsu Horizon saw the largest annual growth, with its 1,000 unit facilities in Guangdong now having a combined potential output of 10,000 units a year. Nowogen and Zhejiang HydroT Tech also cut tape on their first large scale facilities, with production capacities of 2,000 units and 5,000 units respectively.
Part of the drive comes ahead of China’s pledge for a ‘carbon neutral’ Winter Olympics later this year, with a key focus placed on hydrogen-based public transport. This week, The Beijing Public Transport Corporation announced that it will use 212 hydrogen buses in Beijing throughout the 2022 Winter Olympics, as part of 11,000 new energy vehicles for the games. The co-hosting city of Zhangjiakou also already has 444 fuel cell buses in operation.
In total, Beijing plans to have 10,000 fuel cell vehicles on its roads by 2025, serviced by 74 refueling stations. It has forecast its hydrogen use for road transport and power generation to reach 50 tons a day by 2023, and 135 tons by 2025. Between 2021 and 2025, some 4,400 trucks are expected to shift to fuel cells, displacing 145,000 tons of diesel consumption annually, according to a government report. By 2030, the Chinese government wants to have one million fuel cell vehicles on its roads.
In fact, China has already quietly established a leading share in the fuel cell vehicle market. Of the 5,000 fuel cell buses in operation worldwide, around 3,300 have been in installed in China alone, ahead of Europe (around 1,300), and North America (less than 100).
Along with this, throughout 2021, China also doubled its number of hydrogen refueling stations. Led by the provinces of Jiangsu (20) and Shandong (11), Guangdong (10), and Beijing, a total of 100 new stations entered operation throughout the year, bringing the total number across the country to 218.
The country’s largest oil refiner, Sinopec, has also recently upped its green hydrogen plans, with a 20,000 ton-per-year electrolyzer facility set to come online in 2023, as well as signing a deal with Cummins for an electrolyzer Gigafactory in the southern province of Guangdong from 2028 onwards. It also plans to build 1,000 refueling stations by 2025.
It is estimated that more than 400 policies have been signed in China over the past two years, by central or local governments, to support the early buildout of the country’s hydrogen economy. The initial focus has been on fuel cell vehicles, including a nationwide subsidy for their deployment.
The latest version of this, effective between 2020 and 2023, aims to promote hydrogen fuel cell vehicles in Beijing, Shanghai, and Guangdong Foshan city clusters, with subsidies of $240 million over the period.
Small vehicles were each subsidized by the government to the tune of $39,000. Light trucks and commercial vehicles weighing less than 12 tons will receive a standard subsidy of $33,000, with larger units – including large buses – receiving $58,000. The subsidies fell to 92% of their original level in 2021 and will sit at 85% of their original level this year. In 2023, they will again fall to 69% of this. However, high performance components, such as fuel cell stacks, may warrant some extra subsidy, if awarded by an expert committee in the city cluster’s local government.
With this subsidy environment incentivizing large-scale and high-performance fuel cell vehicles, it is no surprise that hydrogen buses and refueling stations saw an uptick through 2021.
Similar growth was seen across China’s fuel cell truck segment, with companies including Sky-well, Foshan Feichi, and Dayun, all ramping up their order books to compete with western OEMs like Nikola and Hyzon Motors. The trio delivered 142 FCEV trucks to the Chinese market in 2020.
Beijing-based Beiqi Foton Motor said in September that it hopes to sell 4,000 hydrogen vehicles by 2023, and 15,000 such vehicles by 2025, while overseas manufacturer Hyundai has signed two letters of intent with Chinese companies to supply a total of 4,000 fuel cell trucks to China by 2025.